Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its st

Question

Barley Hopp, Inc., manufactures custom-ordered commemorative beer steins. Its standard cost information follows: Standard Quantity 1.1 bs. $ 2.2 hrs. Standard Price (Rate) Standard Unit Cost Direct materials (clay) Direct labor 2.00 per Ib. $2.20 $13.00 per hr.28.60 3.08 Variable manufacturing overhead (based on2.2 hrs. $ 1.40 per hr direct labor hours) 87,000 units) Fixed manufacturing overhead ($223,590 2.57 Barey Hopp had the following actual results last year Number of units produced and sold Number of pounds of clay used Cost of clay Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 113,900 100,000 S 180,000 143,900 S 542,900 S 164,900 305.000 Required: Prepare the journal entry to record Barley Hopp's fixed manufacturing overhead costs and related variances for last year (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account fiold.) View transaction list Journal entry worksheet Record the entry for fixed manufacturing overhead costs and 4 MacBook Air

Explanation / Answer

Solution:

Fixed Overhead Spending/Budget Variance = Budgeted Fixed OH – Actual Fixed OH

= $223,590 - $305,000

= $81,410 Unfavorable

Fixed Overhead Volume Variance = Absorbed Fixed OH – Budgeted Fixed OH

Absorbed Fixed OH = Actual Units Produced x Std Budgeted Fixed OH per unit

= 113,900 Units x $2.57

= $292,723

Fixed Overhead Volume Variance = Absorbed Fixed OH $292,723 – Budgeted Fixed OH $$223,590

= $69,133 Favorable

Journal Entry

General Journal

Debit

Credit

Fixed Overhead Budget Variance (Unfavorable)

$81,410

Work In Process Inventory

$81,410

Fixed Overhead Expense

$69,133

   Fixed Overhead Volume Variance (Favorable)

$69,133

General Journal

Debit

Credit

Fixed Overhead Budget Variance (Unfavorable)

$81,410

Work In Process Inventory

$81,410

Fixed Overhead Expense

$69,133

   Fixed Overhead Volume Variance (Favorable)

$69,133

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